Stop Praising Health Insurers For Raising Rates "Just A Little"
stable, slightly, slowly, low, relatively low, lower-than-usual, all words used in recent national articles to describe projected health insurance premium increases for employer-sponsored health plans. I'm sorry, but these words are way too upbeat for my me. Sure, we need to inform people that they can expect smaller health insurance premium increases than in prior years, but I can do without the cheerful tone extolling high but not as high health insurance premiums for some.
Still, you may be thinking that a slowdown in health insurance premium growth is good news or you may be thinking, what's the harm in saying things are better than usual. Where to start?
First, news of lower than usual health insurance premium increases applies mostly to large employers. Smaller employers will continue to see rate increases in or approaching double digits. Second, these "slight" rate increases are made possible by already overinflated health insurance rates. Individual premiums for some small group health plans can be as high as $700 to $1,000 per month, based on benefits covered and cost-sharing structures (e.g., deductibles, coinsurance and copays). These rates are higher than the exchange rates.
But the number one reason we should not celebrate lower than usual group health insurance premiums is that it gives a false impression that we are controlling health insurance and health care costs. That employer groups have finally figured out how to win at the health care negotiating table. That health insurance companies are more accurately predicting risks and passing on the savings to their employer groups. That workplace health insurance is a bargain and operates like a fine-tuned machine, not in need of reform. That health insurance prices are not something we need to address, at least not right now. Nothing could be further from the truth.
Steady Rates or A Red Flag
There is no reason to believe that health insurance costs are under control or are a minor issue in the whole health care reform debate. The cost of health insurance (and health care) is the debate. Health insurance prices are too high and individuals can't determine the value of their policies.
Also, if health insurance was becoming such a bargain, why don't health insurers share price and discount information with the public or employer groups? If insurers are paying providers four, five or six times the Medicare rate for medical services and receive a 50% discount on less, that's no bargain. And if insurers charge a little less to access these inflated, low discount rates, why give them a pat on the back?
Group health insurance plans are a major source of revenue for insurers for a reason. These insurers know that most employers are nothing more than spectators during the annual contract renewal process. The insurer has all the claims and price data that they have deemed proprietary, which means they don't even share it with employers. Employers have no way to know what rates providers charge their group. So when an insurer tells a large employer that we've increased the medical services discount rate from 48% to 51%, employers don't know if the provider rates increased by an equal percentage or that the rate was already six times what Medicare would pay for the same service.
And while some employers, usually the largest ones, aren't taking health insurers at their word that they are offering them a good deal on costs, the majority of employers do. Still, we don't need health care policy writers insinuating that insurers are offering a good deal when the reality is they are not.